Morgan Stanley Changes Calculation Methodology for Certain Mandatorily Exchangeable Securities Linked to the Stock of Unaffiliated Issuers.

Business Editors

NEW YORK--(BUSINESS WIRE)--Aug. 7, 2002

Morgan Stanley will amend the terms of certain of its Mandatorily Exchangeable securities (listed below, by maturity date) so that upon the price-triggered acceleration event described in the prospectus for the securities Morgan Stanley will deliver (i) the number of shares of the underlying common stock specified by the terms of the security, (ii) accrued but unpaid interest to but excluding the date of acceleration, and (iii) an amount of cash per security that represents the sum of the present values of the remaining scheduled payments of interest on the security (excluding the amounts described in clause (ii) above) discounted at applicable market rates to the date of acceleration.

No other terms of the securities will be affected by the amendments.

-- 8% Reset PERQS due October 30, 2002 Mandatorily Exchangeable for Shares of
Common Stock of Yahoo! Inc.

-- 9% Reset PERQS due December 30, 2002 Mandatorily Exchangeable for Shares of
Common Stock of Xilinx, Inc.

-- 20.35% PERQS due January 15, 2003 Mandatorily Exchangeable for Shares of
Common Stock of Siebel Systems, Inc.

-- 8% Reset PERQS due February 28, 2003 Mandatorily Exchangeable for American
Depositary Receipts Representing Ordinary Shares of Nokia Corporation (The
amendments will also affect an acceleration event triggered by delisting of the
ADRs.)

-- 8% SPARQS due April 15, 2003 Mandatorily Exchangeable for American
Depositary Receipts Representing Ordinary Shares of Nokia Corporation (The
amendments will also affect an acceleration event triggered by delisting of the
ADRs.)

-- 8% SPARQS due June 1, 2003 Mandatorily Exchangeable for Shares of Common
Stock of Cisco Systems, Inc.

-- 12% SPARQS due June 30, 2003 Mandatorily Exchangeable for Shares of Common
Stock of Juniper Networks, Inc.

-- 8% SPARQS due June 30, 2003 Mandatorily Exchangeable for Shares of Common
Stock of Oracle Corporation

-- 6.30% SPARQS due June 30, 2003 Mandatorily Exchangeable for Shares of Common
Stock of The Gap, Inc.

-- 8% SPARQS due July 1, 2003 Mandatorily Exchangeable for Shares of Common
Stock of EMC Corporation

-- 10% SPARQS due August 30, 2003 Mandatorily Exchangeable for Shares of Common
Stock of Siebel Systems, Inc.

-- 3% TRIGGERS due August 30, 2003 Based on the Performance of the Common Stock
of Cisco Systems, Inc.

-- 8% SPARQS due September 15, 2003 Mandatorily Exchangeable for Shares of
Common Stock of Texas Instruments Incorporated

-- 10% SPARQS due November 30, 2003 Mandatorily Exchangeable for Shares of
Common Stock of Qualcomm Incorporated

Morgan Stanley (NYSE:MWD) is a global financial services firm and a market leader in securities, investment management and credit services. With more than 700 offices in 28 countries, Morgan Stanley connects people, ideas and capital to help clients achieve their financial aspirations.